Does the financial media play a monitoring role around corporate disclosures?

Mobile phone with graphs and glasses on data sheetManagers issue press releases to communicate information about their firms to investors and other market participants. They often choose to complement disclosures of quantitative performance with qualitative information; in fact, the use of optimistic or pessimistic language throughout financial disclosures can be a tool for managers to either improve investors’ perceptions of firm fundamentals or misinform them.

The financial media closely follows firms’ disclosures and could play an important role as an information intermediary by broadly disseminating the critical points of the news releases, packaging information together from multiple sources, and producing new information.


In light of management’s strategic reporting incentives to emphasise good or bad news in order to influence investors’ perceptions about the firm upward or downward, Nikos Tsileponis and two co-authors examine and provide evidence that the financial press serves an important monitoring role in financial markets.

Specifically, using textual analysis, the paper explores the association between corporate disclosure and financial media article tone, and finds support for the idea that the media not only disseminates corporate information but also interprets the tone of corporate disclosures by attenuating both the positive and negative tone of corporate press releases.

Interestingly, the findings suggest that the media downplays the tone of overly favourable corporate disclosures to a greater extent, indicating that financial journalists view management disclosures containing a highly positive tone with more scepticism compared to negative news announcements. For further reading, please see:

Tsileponis, N., Stathopoulos, K. and Walker, M. (2020). The monitoring role of the financial press around corporate announcements, Accounting and Business Research, 50:6, 539-573.